CONFORMED

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 1996

                                       OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the transition period _______________________ to _________________________

Commission File Number    1-12902
                      ---------------------

                       FRONTIER ADJUSTERS OF AMERICA, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Arizona                                        86-0477573
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                     45 East Monterey Way, Phoenix, AZ 85012
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (602) 264-1061
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                                 Yes   X        No
                                                     -----         -----



Number of shares of Common Stock outstanding on January 28, 1997       4,605,358
                                                                      ----------
<PAGE>
PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements
-----------------------------

                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                December 31, 1996        June 30, 1996
                                                                -----------------        -------------
                                                                   (unaudited)                (*)
                                                ASSETS
                                                ------

<S>                                                                 <C>                    <C>       
CURRENT ASSETS
   Cash and cash equivalents                                        $1,042,535             $  534,540
   Investments                                                       1,270,334              1,249,463
   Receivables                                                       1,552,652              1,549,185
   Prepaid expenses                                                    202,133                288,893
   Other                                                               167,851                159,451
                                                                    ----------             ----------
        TOTAL CURRENT ASSETS                                         4,235,505              3,781,532
                                                                    ----------             ----------

PROPERTY AND EQUIPMENT                                               2,427,794              2,436,167
   Less accumulated depreciation and amortization                      639,462                881,766
                                                                    ----------             ----------
                                                                     1,788,332              1,554,401
                                                                    ----------             ----------

OTHER ASSETS
   Cost of subsidiary in excess of net tangible assets acquired        213,817                213,817
   Less accumulated amortization                                       175,663                174,508
                                                                    ----------             ----------
                                                                        38,154                 39,309
   Receivables (Long term)                                             342,000                327,000
   Investments (Long term)                                             751,050                750,730
   Other                                                               354,082                422,780
                                                                    ----------             ----------
                                                                     1,485,286              1,539,819
                                                                    ----------             ----------
        TOTAL ASSETS                                                $7,509,123             $6,875,752
                                                                    ==========             ==========


                                              LIABILITIES
                                              -----------

CURRENT LIABILITIES
   Accounts payable                                                 $   32,659              $   11,666
   Accrued expenses                                                    276,976                 263,806
   Franchisee/licensee remittance payable                              393,881                 135,518
   Current portion long term liability                                  25,580                  24,672
   Other                                                               207,613                 149,308
                                                                    ----------              ----------
        TOTAL CURRENT LIABILITIES                                      936,709                 584,970
                                                                    ----------              ----------

LONG TERM LIABILITY                                                     46,962                  59,983
                                                                    ----------              ----------

STOCKHOLDERS' EQUITY
   Common stock                                                         47,820                  47,820
   Additional paid in capital                                        2,148,470               2,148,470
   Treasury stock                                                     (529,584)               (485,219)
   Other                                                                 6,167                  (6,691)
   Retained earnings                                                 4,852,579               4,526,419
                                                                    ----------              ----------
                                                                     6,525,452               6,230,799
   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                         $7,509,123              $6,875,752
                                                                    ==========              ==========
</TABLE>

*Condensed from audited financial statements.
 The accompanying notes are an integral part of these condensed statements.
                                        2
<PAGE>
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

<TABLE>
<CAPTION>
                                                    Six Months Ended              Three Months Ended
                                                      December 31,                    December 31,
                                                ------------------------        ------------------------
                                                   1996          1995              1996          1995
                                                   ----          ----              ----          ----
<S>                                             <C>           <C>               <C>           <C>       
REVENUES
   Continuing licensee and
    franchisee fees                             $2,688,729    $2,442,228        $1,300,431    $1,195,333
    Adjusting fees                                 479,995       318,768           204,764       156,997
                                                ----------    ----------        ----------    ----------
                                                 3,168,724     2,760,996         1,505,195     1,352,330
                                                ----------    ----------        ----------    ----------


COST AND EXPENSES
   Compensation and employee benefits            1,262,882       948,640           611,726       480,271
   Office                                          202,359       204,830           101,995        94,885
   Advertising and promotion                       140,088       185,936            58,891       112,119
   Depreciation and amortization                   114,168        88,557            58,213        45,066
   Provision for doubtful accounts                  90,000        70,000            45,000        35,000
   Other                                           369,032       430,314           159,626       189,420
                                                ----------    ----------        ----------    ----------
                                                 2,178,529     1,928,277         1,035,451       956,761
                                                ----------    ----------        ----------    ----------
INCOME FROM OPERATIONS                             990,195       832,719           469,744       395,569
                                                ----------    ----------        ----------    ----------

OTHER INCOME (EXPENSE)
   Interest income                                  74,176        70,123            37,985        38,610
   Other (Net)                                      46,537        16,298            39,184        13,172
                                                ----------    ----------        ----------    ----------
   TOTAL OTHER INCOME (EXPENSE)                    120,713        86,421            77,169        51,782
                                                ----------    ----------        ----------    ----------
   INCOME BEFORE INCOME TAXES                    1,110,908       919,140           546,913       447,351


INCOME TAXES                                       438,798       361,507           217,066       175,756
                                                ----------    ----------        ----------    ----------
   NET INCOME                                   $  672,110    $  557,633        $  329,847    $  271,595
                                                ==========    ==========        ==========    ==========


Weighted Average Shares
 outstanding                                     4,610,021     4,623,800         4,605,358     4,609,658
                                                ==========    ==========        ==========    ==========

NET INCOME PER COMMON SHARE                     $      .15    $      .12        $      .07    $      .06
                                                ==========    ==========        ==========    ==========
</TABLE>

The accompanying notes are an integral part of these condensed statements.
                                        3
<PAGE>
<TABLE>
<CAPTION>
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)

                   Six Months Ended December 31, 1996 and 1995

                                                                  1996              1995
                                                               ----------          -------
<S>                                                           <C>                <C>       
NET INCOME                                                    $  672,110         $  557,633
                                                              ----------         ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization:
        Operations                                               114,168             88,557
        Other                                                        546                 --
   (Gain) on disposition of property and equipment               (24,775)            (1,667)
   Allowance for doubtful accounts                               (50,295)            16,144
Change in assets and liabilities:
(Increase) decrease in:
   Receivables                                                   220,935            276,260
   Prepaid expenses                                               86,760             66,692
   Other                                                         (45,959)           (63,187)
Increase (decrease) in:
   Accounts payable                                               20,993             83,245
   Accrued expenses                                               13,170           (155,536)
   Franchisee and licensee remittance payable                    258,363           (148,390)
   Other                                                          14,304             15,343
                                                              ----------         ----------
Total adjustments                                                608,210            177,461
                                                              ----------         ----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES               1,280,320            735,094
                                                              ----------         ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                         (275,599)           (27,064)
   Investments purchased                                        (974,115)          (986,675)
   Proceeds from sales of investments                          1,000,000          1,000,000
   License acquisition                                           (25,000)           (64,000)
   Payments on License acquisition                               (18,113)           (11,268)
   Advances to licensees and franchisees                      (1,914,581)        (1,949,046)
   Collections of advances to licensees and franchisees        1,825,397          1,732,821
                                                              ----------         ----------
   NET CASH PROVIDED (USED IN) BY INVESTING ACTIVITIES          (382,011)          (305,232)
                                                              ----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash dividends                                               (345,949)          (323,770)
   Common stock repurchased                                      (44,365)           (95,817)
                                                              ----------         ----------
   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          (390,314)          (419,587)
                                                              ----------         ----------

NET INCREASE (DECREASE) IN CASH                                  507,995             10,275
   Cash at beginning of the period                               534,540            358,960
                                                              ----------         ----------
   Cash at the end of the period                              $1,042,535         $  369,235
                                                              ==========         ==========

Supplemental disclosures of Cash Flow information
Cash paid during the period
   Income taxes                                               $  515,344         $  455,788
   Interest                                                   $    4,442         $    3,741
</TABLE>

The accompanying notes are an integral part of these condensed statements.
                                        4
<PAGE>
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


(1) Basis of Presentation
-------------------------

    The  financial  information  included  herein is  unaudited;  however,  such
    information reflects all adjustments  (consisting solely of normal recurring
    adjustments)  which are, in the opinion of management,  necessary for a fair
    statement of results of operations for the interim periods.

    The results of operations for the three and six month periods ended December
    31, 1996 are not  necessarily  indicative  of the results to be expected for
    the full year.

(2) Supplemental Cash Flow Information
--------------------------------------

    On  August  19,  1996,  the  Company  reacquired  the  license  for  the St.
    Petersburg/Clearwater,  Florida territory. The purchase price was $75,000 to
    be paid  $25,000 on date of  purchase  and  monthly  payments of $2,000 plus
    interest at the prime rate plus 2%. As of December 31, 1996, the Company had
    paid the $25,000 down and $6,000  towards the  balance.  On January 6, 1997,
    the Company paid the balance of the purchase price of $44,000.

    Item 2 -  Management's  Discussion  and Analysis of Financial  Condition and
    Results of Operations

    The  statements  contained  in this  Report on Form 10-Q that are not purely
    historical are forward looking  statements within the meaning of Section 27A
    of the Securities Act of 1933, as amended, and Section 21E of the Securities
    Exchange  Act of  1934,  as  amended,  including  statements  regarding  the
    Company's  "expectations",   "anticipation",   "intentions",  "beliefs",  or
    "strategies"  regarding  the  future.  Forward  looking  statements  include
    statements regarding revenue, margins,  expenses, and earnings analysis with
    regard  to the  Company  or  with  regard  to the  Company's  licensees  and
    franchisees for the remainder of fiscal 1997 and thereafter; improvement of,
    and growth in the number of, licensees and  franchisees;  future spending on
    marketing and product  development  strategy;  and liquidity and anticipated
    availability of cash for operations,  acquisitions, or payment of dividends.
    All  forward  looking  statements  included  in this  document  are based on
    information  available  to the Company on the date of this  Report,  and the
    Company assumes no obligation to update any such forward looking  statement.
    It is  important  to note that the  Company's  actual  results  could differ
    materially from those in such forward looking statements.  Among the factors
    that  could  cause  actual  results  to differ  materially  are the  factors
    discussed in this Report, including but not limited to the extent and nature
    of natural  disasters in geographic  areas serviced by the Company or by its
    licensees and franchisees;  management  decisions by insurance companies and
    self-insureds  to increase or decrease the degree to which they contract for
    services offered by the Company, its licensees or franchisees; the Company's
    ability to identify and attract new qualified licensees and franchisees; the
    Company's  ability to successfully  manage offices  reacquired from existing
    licensees and franchisees;  and uninsured liability for acts or omissions of
    the Company's employees, licensees, or franchisees.

    Financial Condition
    -------------------

    The Company has  historically  financed  its growth and on going  operations
    with cash  generated from  operations.  In the six months ended December 31,
    1996, the Company's operations generated $1,280,000 in cash.

    Compared to the last fiscal year, the most  significant  item affecting cash
    provided by the Company's  operations is the $258,000 increase in franchisee
    and licensee  remittance payable.  The Company,  pursuant to agreements with
    its licensees  and  franchisees,  acts as a collection  agent for all of its
    licensees.  The Company  remits to its licensees the  collections,  less the
    on-going license fee and any amounts due the Company, e.g., loan repayments,
    errors and omissions insurance premium. The day of the week that the 
                                       5
<PAGE>
    Company's fiscal period ends,  therefore,  can have a significant  effect on
    the reported amount that is due to licensees and franchisees.  The Company's
    financial statements as of December 31, 1996 reflect net collections payable
    to  franchisees  for three days of $394,000  and as of June 30, 1996 reflect
    collections for one day of $136,000.

    In August 1996 the Company  acquired  14,300 shares of the Company's  common
    stock at a cost of $44,365.  The  repurchase  was authorized by the Board of
    Directors as they  believed  that at the current  price level the  Company's
    common stock was an excellent investment.

    The  Company's  Board of Directors in May 1996,  approved an increase in the
    Company's annual dividend rate from 14 cents per share to 15 cents per share
    effective with the 3.75 cents per share cash dividend paid on June 10, 1996.
    The increase  reflects the Board's policy that  shareholders  participate in
    the Company's growth.

    Through its capital  investment  program,  the Company replaces  obsolete or
    outdated  equipment and invests in new equipment and furnishings to maintain
    or increase the  productivity of the Company and its employees.  The Company
    anticipates  investing $100,000 to $200,000 in fiscal 1997 for equipment and
    furnishings  pursuant to its capital investment  program.  Additionally,  in
    October 1996 the Company acquired a parcel of land and building  adjacent to
    its Corporate  offices.  The purchase price was $170,000 and was paid during
    the second quarter of the Company's current fiscal year.

    Management  believes  that the Company  will be able to fund all of its cash
    requirements  (i.e.  current  operations,  capital asset acquisition and the
    payment of dividends)  from currently  available  cash funds  generated from
    operations.

    The Company's  ratio of current assets to current  liabilities was 4.52 to 1
    as of December 31, 1996 and 6.46 to 1 as of June 30, 1996.

    Results of  Operations - Six Months Ended  December 31, 1996 Compared to Six
    ----------------------------------------------------------------------------
    Months Ended December 31, 1995
    ------------------------------

    Revenues
    --------

    The Company's  revenues  increased 15% or $408,000 to $3,169,000  during the
    six months ended December 31, 1996 from $2,761,000 in the same period of the
    prior fiscal year. This increase  represents a combined $161,000 increase in
    adjusting  and risk  management  fees and a $247,000  increase in continuing
    licensee and franchisee fees.

    The increase of $161,000 in adjusting and risk management fees from $318,000
    in the six months  ended  December  31, 1995 to $480,000  for the six months
    ended December 31, 1996 represents a 51% increase.  A substantial portion of
    this  increase is related to a major storm that  occurred in mid August 1996
    in the  Phoenix,  Arizona  metropolitan  area where the  Company  has claims
    offices. Claims resulting from this storm provided the Company with $100,000
    in adjusting  services  revenues in the six months ended  December 31, 1996.
    Additionally, the Company had an increase in fees of $44,000 from its Tucson
    office which was acquired  from a licensee in the first quarter of the prior
    fiscal  year.  The  balance of the  increase  represents  an increase in the
    demand for the services provided by Company owned offices.

    The  Company's  revenues  from  continuing   licensee  and  franchisee  fees
    increased 10% or $247,000 from  $2,442,000 in the six months ended  December
    31, 1995 to  $2,689,000  in the six months ended  December  31,  1996.  This
    increase  reflects the benefit to the Company's  licensees  and  franchisees
    from an increase in claims as  insurance  companies  and  self-insureds  use
    their  services due to an increase in volume of claims.  Also,  to a greater
    degree,  this increase  reflects the effect of new licensees and franchisees
    and rate increases.

    The Company's  revenues are affected by numerous matters  including the work
    loads of other companies and claims presented by their clients. The Company,
    therefore,  is unable to  project  its future  revenues.  The  Company  has,
    however,  seen growth in licensee and  franchisee  fees paid, and management
    believes  that the Company  will  continue to realize  growth in  continuing
    licensing and franchising fees in the future as it works 
                                       6
<PAGE>
    to  improve   existing  and  add  qualified   licensees   and   franchisees.
    Additionally,  the  Company  will  continue  to  reflect  revenues  from the
    recently purchased Tucson operation.

    Compensation and Fringe Benefits

    Compensation  and  fringe  benefits  represent   approximately  58%  of  the
    Company's  costs and  expenses  and  represent  the  largest  single item of
    expense.  These expenses  increased 33% or $314,000 from $949,000 in the six
    months  ended  December  31,  1995 to  $1,263,000  in the  current six month
    period.  This  increase is the result of the addition of an  Executive  Vice
    President to the  Company's  management  team,  additional  employees  hired
    including  temporary  employees  to  handle  increased  work  loads  in  the
    Corporate office, increased bonus related to the Company's rising income and
    cost of living and merit increases given to employees.

    Expenses Other Than Compensation and Fringe Benefits

    The Company's expenses other than compensation and fringe benefits decreased
    $64,000  during the six months  ended  December  31, 1996 as compared to the
    same period of the prior fiscal year. The principal  items  affecting  these
    expenses are a $58,000  decrease in legal  expenses,  a $26,000  increase in
    depreciation  expense due to capital  expenditures in the prior fiscal year,
    and a $45,000  decrease in advertising  and promotion  expense  representing
    advertising  not placed in the current  year that was placed in the previous
    year.

    The  balance of the  Company's  costs and  expenses  have not  significantly
    changed from the same period of the prior year.

    Income Taxes
    ------------

    The Company's  income taxes for the six months ended December 31, 1996, were
    39% of its income before taxes,  or  approximately  the same as they were in
    the same period of the prior  fiscal  year.  Changes made in the tax laws by
    various states and by the federal  government have not had a material affect
    on the Company's  current overall tax rates,  however,  this could change at
    any time.

    Other Income

    The Company's other income increased  $34,000 or 40% from $86,000 in the six
    months ended  December 31, 1995 to $121,000 in the current six month period.
    The most  significant  items affecting other income are a $3,000 increase in
    the sales of computer software to the Company's licensees and franchisees, a
    $4,000  increase in interest income and a $23,000 gain on the disposition of
    capital equipment.

    Net Income

    The  Company's  net income  for the six  months  ended  December  31,  1996,
    increased $114,000 or 21% from $362,000 in the six months ended December 31,
    1995 to $672,000 in the current period. The most significant items affecting
    net income were the $408,000 increase in revenues,  the $314,000 increase in
    compensation and fringe benefits and the $64,000 decrease in other expenses.

    Results of  Operations - Three Months  Ended  December 31, 1996  Compared to
    ----------------------------------------------------------------------------
    Three Months Ended December 31, 1995
    ------------------------------------

    Revenues
    --------

    The Company's  revenues increased 11% or $153,000 to $1,505,000 in the three
    months  ended  December 31, 1996 from  $1,352,000  in the same period of the
    prior fiscal year. This increase  represents a combined  $48,000 increase in
    adjusting  and risk  management  fees and a $105,000  increase in continuing
    licensee and franchisee fees.

    The increase of $48,000 in adjusting and other fees of Company owned offices
    from $157,000 in the three 
                                       7
<PAGE>
    months  ended  December  31,  1995 to  $205,000  in the three  months  ended
    December 31, 1996  represented  a 30%  increase.  The  increase  reflects an
    increase in the demand for the  Company's  services as well as revenues from
    the Company's Tucson operation acquired in August of 1995.

    The  Company's  revenues  from  continuing   licensee  and  franchisee  fees
    increased 9% or $105,000 from  $1,195,000 in the three months ended December
    31, 1995 to  $1,300,000  in the three months ended  December 31, 1996.  This
    increase  reflects the benefit of the Company's  licensees  and  franchisees
    from an increase in claims as insurance  companies  and  self-insureds  used
    their  services due to an increase in volume of claims.  Also,  to a greater
    degree,  this increase  reflects the effect of new licensees and franchisees
    and rate increases.

    The Company's  revenues are affected by numerous matters  including the work
    loads of other companies and claims presented by their clients. The Company,
    therefore,  is unable to  project  its future  revenues.  The  Company  has,
    however,  seen growth in licensee and  franchisee  fees paid and  management
    believes  that the Company  will  continue to realize  growth in  continuing
    licensing and franchising fees in the future as it works to improve existing
    and to add qualified licensees and franchisees.

    Compensation and Fringe Benefits
    --------------------------------

    Compensation  and  fringe  benefits  represented  approximately  59%  of the
    Company's  costs and  expenses  and  represent  the  largest  single item of
    expense. These expenses increased 27% or $132,000 from $480,000 in the three
    months  ended  December  31,  1995 to  $612,000  in the three  months  ended
    December  31,  1996.  The  increase  is the  result  of the  addition  of an
    Executive Vice President to the Company's  management  team, the addition of
    employees  to  handle  the  increased  work  load in the  corporate  office,
    increased  bonuses  tied to income and for cost of living  and merit  raises
    given to employees.

    Expenses Other Than Compensation and Fringe Benefits
    ----------------------------------------------------

    The Company's expenses other than compensation and fringe benefits decreased
    $53,000  during the three months ended  December 31, 1996 as compared to the
    same quarter of the prior fiscal year. The principal  items  affecting these
    expenses were a $21,000 decrease in legal expenses and a $53,000 decrease in
    advertising and promotion expenses.

    The  balance  of the  Company's  costs and  expenses  did not  significantly
    changed from the same period of the prior fiscal year.

    Income Taxes
    ------------

    The  Company's  income taxes for the three  months ended  December 31, 1996,
    were 39% of its income before taxes, or approximately  the same as they were
    in the same period of the prior fiscal year. Changes made in the tax laws by
    various states and by federal  government did not have a material  affect on
    the Company's overall tax rates.

    Other Income
    ------------

    The  Company's  other  income  increased  $25,000 or 49% from $52,000 in the
    three  months  ended  December 31, 1995 to $77,000 in the three months ended
    December 31,  1996.  The most  significant  increase in other income was the
    gain on disposition of fixed assets of $24,000.

    Net Income
    ----------

    The  Company's  net income for the three  months  ended  December  31, 1996,
    increased  $58,000 or 21% from  $272,000 in the three months ended  December
    31, 1995 to $330,000.  The most significant  items affecting net income were
    the $153,000 increase in revenues, the $132,000 increase in compensation and
    fringe benefits and the $53,000 decrease in other expenses.


    PART II: OTHER INFORMATION

    Item 1 - Legal Proceedings

    A Declaratory  Judgment  action was filed in May 1994 against the Company in
    the Superior Court of Los Angeles, California,  regarding the interpretation
    of certain sections of the Company's license agreement with 
                                       8
<PAGE>
    the plaintiff, a licensee. In June 1994 the Company removed the case to U.S.
    District  Court and  raised  certain  counter  claims for  violation  of the
    Company's license agreement. The Company terminated the licensee's agreement
    effective  January 1, 1995.  Subsequent  to the  termination,  the plaintiff
    amended  his  complaint  to  include  wrongful  termination  of his  license
    agreement.  On May 1, 1995,  the U.S.  District  Court granted the Company's
    motion  for  Summary  Judgement  regarding  all  outstanding  claims  by the
    plaintiff.  On June 19,  1995,  the  Court  granted  the  Company's  Summary
    Judgement motion regarding its claims against the former licensee  including
    $204,144  in unpaid  licensee  fees and for court  costs  which  amounted to
    approximately  $24,000.  In July 1995, the plaintiff appealed this judgment,
    and on December 17, 1996,  the U.S.  Court of Appeals for the Ninth  Circuit
    affirmed the judgement of the District Court.

    In August 1995, Mark Brockbank and Alan Bird  individually  and on behalf of
    certain Underwriters at Lloyd's,  London, a client of a former franchisee of
    the Company,  filed a complaint against multiple  defendants,  including the
    Company, in the District Court of Dallas County, Texas. The complaint arises
    from the alleged embezzlement of over $700,000 by the former franchisee. The
    complaint  alleges claims against the Company  including breach of contract,
    breach of  fiduciary  duty,  negligence,  negligent  supervision,  negligent
    misrepresentation  and negligent licensing.  The complaint seeks unspecified
    damages from the Company.  The Company's  insurance carrier is defending the
    suit  subject  to  a  reservation  of  rights.  The  Company  is  vigorously
    contesting the  plaintiff's  allegations as to the Company and believes that
    its defenses are meritorious.  The Company does not believe that the results
    of this  litigation  will have a material  adverse  effect on the  Company's
    results of operations.

    From time to time in the normal course of its business, the Company is named
    as a defendant in lawsuits.  The Company does not believe that it is subject
    to any such lawsuits or litigation or threatened lawsuits or litigation that
    will have a material adverse effect on the Company or its business.

                                   SIGNATURES


    Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, the
    registrant  has duly  caused  this  report to be signed on its behalf by the
    undersigned thereunto duly authorized.


                             FRONTIER ADJUSTERS OF AMERICA, INC.



    Date:          2/3/97    /s/         William J. Rocke
          -----------------  ---------------------------------------------------
                             William J. Rocke, Chief Executive Officer/Chairman
                             of the Board, Director, Principal Financial Officer


    Date:          2/3/97    /s/         Jean E. Ryberg
         -----------------   ---------------------------------------------------
                             Jean E. Ryberg, President, Director
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